Is Complexity in Healthcare Killing Us?

We spend almost $10,000 per year per capita in healthcare, about twice as much as the average developed economy. However, we get little for what we spend: in terms of major health outcomes, such as infant mortality or life expectancy, we rank below most other developed nations. Why?

Among other reasons, complexity explains why we have not resolved this issue yet. Complexity in our fee for services payment system; a medical training bias towards specialties as opposed to general practice; cumbersome administrative and IT processes; technology innovations that more often than not add costs and complicated solutions; patient accounting systems and electronic medical records costing tens of billions of dollars in aggregate, but still unable to “talk to each other” across our nation’s medical centers; a myriad of testing procedures that can be redundant and offer little help to patients; a very complex drug and medical devices supply chain that is everything but low cost; convoluted regulations that govern approval of new drugs and the protection of patients against powerful industries; and in the enormous number of public, private, private not-for-profit providers and insurers that make our healthcare system.

As a result of this complexity and high costs, our healthcare system suffers from a zero-sum game syndrome: either millions gain access to medical insurance, at the expense of increased costs – typically when Democrats are in power; or millions may lose healthcare coverage in efforts to lower taxes – in legislative attempts when Republicans rule the show. Every developed country other than the U.S. has had universal care for decades. While Prussia’s Otto Von Bismarck implemented the first universal care system . . . in 1883, our healthcare history is a patchwork of partial reforms, an inefficient collage of private and public institutions.

We first tied health insurance to employment after WWII, because business and conservative opposition would not allow universal coverage; then added Medicare in the sixties so that our seniors would have coverage after they retired; then Medicaid, a different one for each one of our fifty states; then the “Affordable Care Act” or Obamacare, which gave insurance to over twenty million people but did not reduce costs. Rather, the ACA’s health exchanges, ironically a conservative Heritage Foundation concept first implemented in Massachusetts by then Republican governor Mitt Romney, added new complexity to the system; With Donald Trump and Republicans in charge, their potential “repeal and replace” efforts to kill the ACA degenerated into a partisan cacophony in the summer of 2017 – Obamacare remains the law of the land.

We have a myriad of different insurance plans and hospitals. Government entities and private companies both run healthcare operations. The one common thread is that healthcare complexity, like entropy, keeps increasing. Incremental changes pile up on top of incremental changes.

This is because adding complexity to an already complicated system is simple and politically expedient: incremental change is easy, whereas the much needed comprehensive reform that could improve healthcare in the U.S. is quite difficult to implement. Getting to a simpler overall system represents a huge political challenge – one that could only be met in a new era of political bi-partisanship, unfortunately very far from today’s situation in Washington.

Complexity is overwhelming, and overall costs are out of control. Many of our healthcare providers and hospitals are close to insolvency. But not everybody is losing in our system: the for-profit health insurance sector and pharmaceutical companies do very well financially. There is profit in complexity, and this also explains resistance to change.

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About the Author

Etienne Deffarges holds a variety of board positions with companies in aerospace, automotive, construction, energy, food, and healthcare. Previously, he was part of the founding team, EVP and Vice Chairman at Accretive Health (now R1 RCM); a global managing partner at Accenture; a senior partner with Booz Allen Hamilton; and a general field engineer with Schlumberger.